IKEA’s low cost
concept keeps it ahead of its competitors.
IKEA is the cost leader in the furniture industry. A living room furnished with IKEA products isas much as 65% less expensive than one furnished with equivalent products from other stores. Itstarget market are the young married couples, college students, 20 to 30-something singles andmiddle class families who are basically price sensitive customers. So, if they can get furniture ata much lower price, of course the will opt for that. Thus, this concept gives IKEA its biggestcompetitive advantage keeping it ahead of its competitors.
IKEA has successfully combined low cost with good quality.
Generally people have an idea that price and quality are directly related as in, higher the pricebetter is the quality and lower the price lower is the quality. However, IKEA has successfullychanged this idea related to furniture. Not only is its furniture much lower priced than itscompetitors, they also have great quality. It has productively combined low cost with good
quality. Its “democratic designs” which balances function, quality, design and price gives IKEA
the competitive edge.
IKEA’s research
and development team finds ways to alter designs to save onmanufacturing costs.
Starting with the designer Gillis Lundgren, IKEA’s research and development team always finds
ways to alter designs to save on manufacturing costs. The goal of the research and developmentteam is to come up with stylish functional designs with minimalist lines that can be cost-efficiently manufactured. This keeps the cost down and allows for the prices to be much lowerthan that of the competitors.
A key feature of IKEA furniture is self-assembly.
A key feature of IKEA furniture is self-assembly. This proves to be a very efficient concept forboth the parties
–
IKEA as well as its customers. The furniture pieces are taken off and flatpacked and then assembled by the customers at their homes. It reduces IKEA transport andwarehouse costs as well as saves additional hassles related to transporting a big piece of furniture, and the customers are also willing to take on the task of assembly in return for lowerprices. Due to this, the furniture are always readily available which means the customers do nothave to wait 2/3 days after purchase for their furniture. This is a breath of fresh air for thecustomers.